On September 20, the U.S. Federal Trade Commission (FTC) amended its lawsuit over Amazon Prime’s subscription and cancellation process to add three Amazon employees as individual defendants. The FTC’s decision to name these employees as individual defendants in a case like this has never occurred in the 109-year history of the agency. This change in FTC policy raises serious questions about when it is appropriate to hold an individual defendant liable for alleged misconduct by its employer, and it risks creating the wrong incentives for corporate executives. Other companies should closely monitor this case as the court and the FTC grapples with these issues.

As an initial matter, there is no dispute that the FTC may pursue individual defendants in appropriate cases. Indeed, throughout its history, “[t]he Commission often names individual defendants in cases against small companies, [but it] rarely — if ever — does so in the case of large, publicly traded companies.”¹ There are three issues with the FTC’s decision to sue the individuals in this case.

First, the FTC’s complaint suggests that it can hold corporate officials liable even if they did not personally engage in the unfair or deceptive practices. Here, the FTC does not allege that any of the individual defendants personally designed, developed, or created the allegedly illegal Prime signup or cancellation processes. Instead, the FTC repeatedly alleges that the individuals “had the authority to control” these...

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